dissenting: The decision of the majority is reached only by declaring invalid a Treasury regulation that is squarely in point. In so doing, the Court appears to have paid but little heed to the well established rule that “Treasury regulations must be sustained unless unreasonable and plainly inconsistent with the revenue statutes and that they constitute contemporaneous constructions by those charged with administration of these statutes which should not be overruled except for weighty reasons.” Commissioner v. South Texas Co., 333 U.S. 496, 501. See also Bingler v. Johnson, 394 U.S. 741, 749-750; Fawcus Machine Co. v. United States, 282 U.S. 375, 378; Boske v. Comingore, 177 U.S. 459, 470; Brewster v. Gage, 280 U.S. 327, 336; Textile Mills Corp. v. Commissioner, 314 U.S. 326, 336-339; Colgate Co. v. United States, 320 U.S. 422, 426; De Treville v. United States, 445 F. 2d 1306, 1311-1312; Buhler Mortgage Co., 51 T.C. 971, 979, affirmed per curiam 443 F. 2d 1362 (C.A. 9); William F. Sanford, 50 T.C. 823, 832, affirmed per curiam 412 F. 2d 201 (C.A. 2).
Certainly, the regulation which was here dealt a death blow is not “unreasonable,” for the Court itself recognizes that the result which it reached “gives a taxpayer in petitioner’s position an advantage not enjoyed by residents of noncommunity property states.” Had this taxpayer lived in a common-law jurisdiction, his entire income would have been subjected to taxation, subject merely to an exclusion under section 911; but because he was in a community property jurisdiction, half of his earnings are allocable to his wife and excludable because she is a nonresident alien. Yet, by this decision, the Court adds to his tax benefits by applying the entire exclusion under section 911 to his one-half of the income. This windfall alone should have given the Court pause before invalidating a regulation that sought to avoid that result. And I find nothing in the legislative history or the decided cases which establishes that the regulation is “plainly inconsistent” with the statute.
Indeed, Renoir v. Commissioner, 321 F. 2d 605 (C.A. 9), affirming 37 T.C. 1180, relied upon by the majority, would appear to me to be precisely contrary to its position. There, the Court in effect required that the foreign-earned income exclusion be divided between spouses who were residents of a community property State.1 The Court applied the statute in such manner as not to discriminate in favor of residents of community property States. Surely, it is a matter of exquisite irony to invoke the Renoir case in support of the result reached by the majority herein. The language of the opinion in that case, relied upon, here, must be read in the light of the problem that was there being considered. In my judgment, similar language in the legislative history was intended merely to articulate the philosophy of the Renoir case.
The problem of applying the various provisions of the revenue laws to residents of community property jurisdictions has been productive of considerable confusion among the decided cases. But, as we pointed out in Daniel M. Ebberts, 51 T.C. 49, 54, “Although the theories discussed in the cases are not always consistent and at times are even confusing, there is nevertheless a discernable underlying principle that is common to virtually all of these cases, even though if may be articulated only on occasion, namely, that unless there is a clearly manifested legislative purpose to the contrary, the revenue laws will be interpreted in such manner as to prevent discrimination either for or against residents of community property States.” The Ebberts case itself is a good example of that approach, and the opinion describes a variety of other situations in which the same approach has been followed. 51 T.C. at 53-54.2
In any event, considering the issue before us in the light most favorable to petitioner, his position is at best an arguable one. But it is in that very type of situation that a clearly applicable regulation should be regarded as controlling. I can find no excuse for declaring it invalid, and certainly, in the words of the South Texas case, I know of no “weighty reasons” for so doing.
DawsoN, SimpsoN, and Qttealy, JJ., agree with this dissent.Compare Stewart v. Commissioner, 95 F. 2d 821 (C.A. 5), holding that in reporting community income, expenses relating to such income must be divided between the spouses.
More recently, in Martin Colton, 56 T.C. 471, involving dependency exemptions for children of divorced parents, the Court was not beguiled by the applicable community property law and held without dissent that the purpose of the statutory provisions relating to dependency exemptions was not to be frustrated by a literal application of the statute.